2022 (9) TMI 1425 - HC - Indian Laws

Dishonour of Cheque - petitioner has been asked to deposit 20% of the cheque amount within a period of 60 days from the date of passing of the order - discretion of Magistrate to impose interim compensation in terms of Section 143-A of the N.I. Act - HELD THAT - Counsel for the petitioner, as well as the complainant (s) are directed to appear before the trial court on 07.09.2022 and move a joint application, bringing to the notice of the court the present order passed by this court - The Judicial Magistrate Ist Class, Sirsa, would indicate the date to both the parties for finally arguing with respect to the deposit as per the provisions of Section 143-A of the Negotiable Instruments Act, 1881. Petition disposed off.

Summary

Issues:
- Interpretation of Section 143-A of the Negotiable Instruments Act, 1881 regarding the discretion of the Magistrate to impose interim compensation.
- Requirement of reasons for exercising discretion by the Magistrate.
- Validity of the order passed by the Judicial Magistrate Ist Class, Sirsa.
- Procedure for setting aside the impugned order and passing a fresh order.
- Release of the amount deposited by the petitioner in accordance with the fresh order.

Interpretation of Section 143-A:
The petitioner challenged the orders passed by the Judicial Magistrate Ist Class, Sirsa, requiring a deposit of 20% of the cheque amount within 60 days. The petitioner argued that the discretion under Section 143-A of the N.I. Act ranges from 1% to 20%, emphasizing the need for reasoned orders. Citing judgments from Karnataka and Madras High Courts, the petitioner contended that arbitrary actions result from the lack of reasons in exercising discretion.

Requirement of Reasons for Exercising Discretion:
The petitioner highlighted the necessity for reasons to support the exercise of discretion by the trial court, as emphasized in the judgments cited. The absence of recorded reasons could render the exercise of discretion arbitrary, as per the legal interpretation provided by the Karnataka and Madras High Courts.

Validity of the Impugned Order:
The petitioner had already deposited 20% of the cheque amount in compliance with the order but sought its setting aside due to the lack of reasoning behind it, as mandated by Section 143-A and the referenced judgments. The respondent's counsel requested a fresh order, arguing for a fair hearing and consideration of judgments supporting their stance.

Procedure for Setting Aside and Passing a Fresh Order:
After hearing both parties, the High Court allowed the petitions and set aside the impugned orders. It directed the parties to appear before the trial court, set a date for arguments on the deposit, and requested a fresh order within 15 days of concluding arguments. The cumulated amount, including interest, would be released based on the fresh order after 30 days.

Release of Deposited Amount According to Fresh Order:
The High Court clarified that its order did not favor either party, emphasizing the independence of the trial court in deciding the deposit under Section 143-A. It ensured that the trial court proceedings were not stayed and maintained the existing stay order in accordance with the law.

This detailed analysis of the judgment from the Punjab and Haryana High Court addresses the interpretation of Section 143-A, the necessity of reasons for discretion, the validity of the impugned order, the procedure for setting it aside and passing a fresh order, and the release of the deposited amount in accordance with the fresh order.